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3 profit growth. Casino knows that the retention rate of its loyal customers is 20% higher if they have experienced the rewards of the programme and spent their points. In 1995, when Tesco Clubcard launched, one of the reasons it was so revolutionary was because the retailer was properly investing in rewarding loyal customers, rather than throwing money at chasing elusive customers it didn't have. And it works. Over the last 10 years the proportion of Tesco's growth from existing customers spending more, is greater than growth from new customers. This approach represents a sea change in the way marketing investment is spent. A sea change Think about it. Most companies spend their marketing budgets offering huge discounts or broadcasting glamorous TV ads to attract new customers. In some sectors, especially financial services, these special deals are only available to new customers, while the loyal customers get nothing in return for their loyal service. Edwina Dunn, Chief Executive and co- founder dunnhumby, elaborates: " Most manufacturers chase this elusive customer prospect, they all run after their competitor's customers but we can prove that if they were to spend that money rewarding people who already use their product their existing customers would spend even more." Saying thank you to existing customers is the new way of doing marketing. That's where dunnhumby's partners act differently. Retailers including Kroger, Casino, The Home Depot, Gruppo Pam and of course Tesco all invest serious money in rewarding their most loyal customers. Tesco, which has been running its programme the longest, knows that every £ 1 it invests in Clubcard leads to a much larger uplift in sales, together with longer- term benefits. But the process of analysis that enables retailers to say thank you to the right customers is not simple; shoppers tend not to fall into neat bundles. dunnhumby calculated that only 342 of 3.5m Casino customers bought all 10 of the French supermarket's top 10 selling products. This insight helped Casino understand that every customer has very different products in their shopping baskets. We are all individuals and only those companies who truly understand their customer data will be able to treat us as such. secret weapon

4 Clive Humby, Chairman and co- founder of dunnhumby, argues that a pensioner who may have a small shopping basket but spends a large proportion of their weekly pension on a grocery shop is more loyal than a shopper who dips in and out of a retailer, sometimes buying big ticket items like a plasma screen TV. dunnhumby's insight teams have spent aeons fine tuning their analysis to ensure these schemes really do reward the most loyal customers, not just those who spend a large amount occasionally. If the business only looked at customer value, a metric that judges customers on how much money they spend, loyal shoppers like pensioners would miss out on rewards. Rewards! Towards ? 100m ( about £ 86m) was handed out in rewards by Casino supermarkets to its loyalty card customers in 2008. Casino prints a ' cadeau- meter' on its quarterly statement to clearly show how many points a loyal customer has collected and what rewards they will be able to collect. Similarly, £ 400m a year is handed out in rewards by Tesco to its Clubcard customers. For both Casino and Tesco, this is how they say thank you to their customers. Or as Tesco Clubcard's 1995 launch campaign put it: ' Clubcard is the world's biggest Thank You card.' Kroger offers its customers a similar token of appreciation through the Kroger Plus card. What used to be considered a discount card like many other supermarket cards in the US is now regarded as something of real value by its customers. " They seem to know exactly what I like, and they give me coupons for things I actually need. I appreciate that, especially right now," said one customer. Four times a year Tesco sends its customers money in the form of vouchers that they can spend freely towards their shopping bill. This is where the £ 400m figure comes from. Often these Clubcard vouchers are worth £ 20 or more, and will appear in a mailing alongside promotional discount coupons from the customer's favourite products and brands. The Clubcard is a contract between Tesco and its customers. In exchange for recording a customer's shopping behaviour every time they swipe their Clubcard, Tesco customers earn one point for every £ 1 spent; these points are translated into vouchers where one point is worth one penny. any colour you like as long as it's any colour you like They seem to know exactly what I like, and they give me coupons for things I actually need